Understanding the Differences Between 3PL and 4PL in the Logistics and Supply Chain Industries

Some time ago, a very knowledge friend explained to me the functions and differences between 3PL and 4PL. the functions of 4PL, or fourth party logistics, can only be carried out by a company who first uses 3PL services for delivery processes with assistance from technological system, for example, for cross-docking. But first, what are the differences between 1PL, 2PL, 3PL and 4PL? the following figure shows the fundamental difference:

 

Terminology

Service

Actors

4PL

Logistics services tailor-made to supply chain needs of the client using best in class resources

 

Supply chain

Management

Lead logistics

providers &

consultants

 

3PL

Contract service with own or inbuilt resources                                                     

Logistics

Logistics service providers

2PL

Individual or systemized services with own or external resources

Transportation

Carries

1PL

Standardized services with own or external resources             

 

Manufacturing

Retailing

 

Cargo

Owner

 

As illustrated in above, 1PL is the owner of the cargo while 2PL is the agent that provides transportation services for the shipping of raw materials, intermediate goods and finished goods. 3PL is generally the provider of logistics services, such as warehousing and delivery. As for 4PL, it often includes 3PL companies which provide services for integrated supply chains but 4PL also provides management for other 3PL companies.

Here are some types of 3PL providers: